Final Market Readiness Proposal Country: Indonesia FINAL MARKET - - PowerPoint PPT Presentation

FINAL MARKET READINESS PROPOSAL: INDONESIA

Final Market Readiness Proposal

Country: Indonesia

FINAL MARKET READINESS PROPOSAL: INDONESIA 2

Introduction: MRP Focus

• Core Technical and Institutional Readiness

Components in Power and Industry Sectors:

• Emission profile and baseline setting
• MRV system development and piloting in electricity

generation and cement production

• Planning for a Market-based Instrument:
• Technical assessment and policy consultation on

market instrument

• Piloting the selected instrument

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Introduction: MRP Objective

 The Objectives: To understand and determine the type

and scope of appropriate market-based instruments; to prepare supporting draft regulation as needed; to design and establish market infrastructures; to build required capacity of participating institutions and individuals.

 The Long Term Goal: The establishment of new market

mechanisms or market based instruments to scale-up mitigation actions in Indonesia based on country- specific conditions and international carbon market situations.

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Process of Revising MRP

 Consultations with other ministries after PA6  Changes in MRP text to update its context, better

formulation of focus and objectives, as well as to address PA6 questions

 Incorporate timeline, list of activities and budget  Presentation of final MRP to relevant ministries as the

result of MRP preparation works

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 Joint Crediting Mechanism (JCM) between Indonesia

and Japan was established in August 26, 2013.

 The new development will not affect PMR

Implementation Phase much. However, JCM experiences may provide knowledge and awareness to support Implementation Phase. Update on Context

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General feedback from PA6

• 1. Some of the figures in

Indonesia MRP presentation should be incorporated to the final proposal (figures in the slide number 40).

• 2. Need some clarifications on

PMR institutional arrangements.

• 3. Nusantara Carbon Scheme

and other new initiatives should be described clearer.

• 4. Need to consider the time

framing on the proposed schedule.

Feedback

• 1. Done.
• 2. Done.
• 3. Done. We put a text box to

describe the NCS.

• 4. Done. We already consult

with the ministries involved.

Follow Up

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Specific feedback from PA6

• 1. Elaborate as much as possible

the direction it expects to go in terms of emission trading, crediting, a combination of the two or something entirely new.

• 2. Include discussion on demand

and how it is expected to develop, and more details on bilateral relationship with Japan.

Feedback

• 1. Done. A text box of MBI is

already incorporated to the proposal.

• 2. Done. We put the latest

progress of JCM and its demand.

Follow Up

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MRV and data issues feedback from PA6

• 1. Express clarity on the work on

MRV for NAMAs by BAPPENAS

• r other ministries.
• 2. On data: explain emission data

from industries already

• btained and explain how

mitigation potential (sectoral) is determined.

• 3. On data collection: it is

important that the reporting entities understand the purpose of the data collection

Feedback

• 1. Responses on MRV are found
• n paragraphs: 114,116, Table

9, Table 10, paragraphs 124.

• 2. There is no further detail data

yet from the Ministry of Industries.

• 3. It’s explained on the

institutional tracks of the MRV development.

Follow Up

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Sector choices & baselines feedback from PA6

• 1. More discussion on the

selection process of narrowing the choice from 11 to 3.

• 2. Explain how this top down

target is with respect to bottom up activities that are being carried out.

• 3. More information on the

planned cap: what kind of cap is it, will it cover individual emission?

• 4. Explain whether there is lesson

learnt or possible synergy to be contributed to the success of this PMR activities.

Feedback Follow Up

• 1. It’s explained in para. 64, 65,

and 66

• 2. It’s explained in para. 70
• 3. It’s explained in para. 72
• 4. It’s explained in MBI Text Box

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 Provide climate change policy context in Indonesia.  Total GHG emission in 2020 is estimated to reach 2.95 GtCO2.

Forestry and peat will remain as major emissions sources until then, however, energy related emissions will have the highest growth rate.

 Indonesia is committed to reduce GHG emissions by 26% below

BAU level in 2020 by its own resources. With international support, further emission reduction could achieve 41%.

 An indicative list of activities to achieve the target is available

(RAN-GRK).

 Market-based instruments can be a promising tool to cost-

effectively abate GHG emissions to support achievement of unilateral GHG emissions reduction target, or even beyond that.

Summary of Building Block 1

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 Provide the process of target areas selection for PMR

Implementation Phase

 The process involved considerations such as:

• Existing policies
• Emissions reduction potential
• Replicability
• Technology availability
• Investment effectiveness
• Stakeholder supports
• Issues in MRV
• Market sustainability

 The selection process resulted two target areas for priority

sectors in PMR Implementation Phase: electricity generation and energy-intensive industries

Summary of Building Block 2

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 The selection process provides logical framework for the MRP as summarized

below:

Summary of Building Block 2 (ctd.)

Framework; Scope; Mechanism & Governance; Guidelines; Piloting in Jamali & Cement Industry; Etc. MRV System in Power and Industry Sector Law No. 30/2007 of Energy Law No. 32/2009 of Environmental Protection GR No. 70/2009 of Energy Conservation PR No. 61/2011 of National Action Plan for GHG Reduction PR No. 71/2011 of National GHG Inventory MEMR No. 14/2012 of Energy Management MoI No. 14/2012 of GHG Reduction Road Map in Cement Industry PR No. 28/2008 of National Industry Policy Law No. 6/1994 of UNFCCC Ratification Energy Management System GHG Information Information for Policy Making

+

Policy Context Expected Output Expected Outcome Goal

Gap Analysis Cost & Benefit Analysis

Assessment; Selection; Design; Piloting; Etc. Market-based Instrument Design MBI Design + Piloting Best Practice Benchmark for Other Sector

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 Describe the existing works and further works necessary to

develop a robust and reliable database useful for future target setting.

 All activities to support this shall be participatory, transparent,

reliable and encourage consensus among stakeholders.

Summary of Building Block 3

Activities Budget Needed (USD) Requested (USD)

• A. Profiling Emissions in Power & Industry Sectors

 A comprehensive carbon abatement cost curve in the two target areas. 700,000 300,000  A calculated / reviewed / estimated sectoral baseline emission of the target areas 250,000 100,000 Total 950,000 400,000

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 Describe the activities to be conducted in order to develop a

working MRV system within power and industry sectors.

 MRV system development works will be divided into Governance

Track and Piloting Track.

 Governance Track will deal with policy support development,

institutional framework development, relevant guidelines development, data management, etc. to ensure the MRV system is workable dan sustainable. The development works will build upon the existing practice to the farthest extent as possible and appropriate.

 Piloting Track will focus on fine tuning the MRV system taking into

account the participants circumstances.

 All activities shall be participatory, transparent, reliable and

encourage consensus among stakeholders.

Summary of Building Block 3 (ctd.)

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Summary of Building Block 3 (ctd.)

Activities Budget Needed (USD) Requested (USD)

• B. MRV System Development (Governance Track)

 Rules and regulations on MRV 450,000 250,000  Institutional set up for MRV 600,000 300,000  Capacity building and awareness raising activities 1,000,000 250,000 Total 2,050,000 800,000

• C. MRV System Development (Piloting Track)

 Map of MRV activities at the installation level in Indonesia 200,000 100,000  Monitoring protocols 500,000 200,000  Data management system at the installation level 600,000 250,000  GHG emission data and review on MRV system at installation level and at aggregated data management level 400,000 100,000 Total 1,700,000 650,000

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 Describe the activities to comprehensively assess, prioritize,

select, design and test market-based instrument in appropriate sector

 All activities shall be participatory, transparent, reliable and

encourage consensus among stakeholders.

Summary of Building Block 4

Activities Budget Needed (USD) Requested (USD)

• D. Framework for Market-Based Instrument

 A comprehensive assessment report on MBI options for Indonesia 450,000 250,000  A design of selected market-based instrument for selected sector 300,000 200,000  Draft policy(ies) required for the establishment and implementation of MBI 450,000 250,000  Piloting the market-based instrument in the selected sector 650,000 300,000 Total 1,850,000 1,000,000

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 Define the organization structure of Implementation Phase,

which consists Steering Committee, Project Implementation Unit(s), and Expert Group(s).

 Describe the activities to integrate all works in Implementation

Phase and appropriately communicate the progress and results to relevant stakeholders.

 DNPI will be the PIU for organization, communication and

stakeholder engagement.

Summary of Building Block 5

Activities Budget Needed (USD) Requested (USD)

• E. Organization, Communication, Consultation and

Engagement  PMR implementation reports 100,000 50,000  Stakeholder consultations and capacity building reports 300,000 100,000 Total 400,000 150,000

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Implementation Phase Schedule

Profiling Emissions A comprehensive carbon abatement cost curve in the two target areas. A calculated / reviewed / estimated sectoral baseline emission of the target areas MRV System Development (Gov't Track) Rules and regulations on MRV Institutional set up for MRV Capacity building and awareness raising activities MRV System Development (Piloting Track) Map of MRV activities at the installation level in Indonesia Monitoring protocols Data management system at the installation level GHG emission data and review on MRV system at installation level and at aggregated data management level Framework for MBI A comprehensive assessment report on MBI options for Indonesia A design of selected market-based instrument for selected sector Draft policy(ies) required for the establishment and implementation of MBI Piloting the market-based instrument in the selected sector Year-1 Year-2 Year-3 Year-4 PMR Activities

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Process of developing Indonesia PMR budget

 Interministrial meetings was conducted to discuss

the proposal budget.

 Three ministries, the Ministry of Finance, the

Ministry of Industry, and the Ministry of Energy and Mineral Resources , calculated their budget needs based on activities proposed in the draft MRP and actual conditions.

 The MRP preparation consultant combine all of the

budget needs and discuss it among ministries.

 We comes up with the “minimal amount” needs of

the previous budget proposed.

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Activities Budget Needed (USD) Requested (USD) Profiling Emissions in Power & Industry Sectors 950,000 400,000 MRV System Development (Governance Track) 2,050,000 800,000 MRV System Development (Piloting Track) 1,700,000 650,000 Framework for Market-Based Instrument 1,850,000 1,000,000 Organization, Communication, Consultation and Engagement 400,000 150,000 Total 6,950,000 3,000,000

Recapitulation of Proposed Budget

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Conclusion

• Indonesia MRP proposes works on (a) core technical

and institutional readiness components in power and industry sectors and (b) planning for a market-based instrument (MBI). It will be completed in 4 years after project start.

• These works will enhance understanding of market-

based instruments, support the implementation of existing climate-related policies, and contribute to the decision making process of MBI implementation.

• Out of total estimated cost of USD 6,950,000,

Indonesia request the PA for USD 3,000,000 funding.

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Shukran ! Terimakasih !